Portugal: the NHR regime and its 2024 sunset

• An overview of Portugal's new IFICI regime — International Bar Association, 2025
• Portugal – Expatriate Tax Regime Ended; New Tax Incentive for Scientific Research and Innovation — KPMG, 2025

Background

Portugal launched its Non-Habitual Resident (NHR) regime in 2009 to attract retirees, skilled professionals and wealthy foreigners. At its peak it made Lisbon and the Algarve two of Europe's most popular relocation destinations.

Facing rising housing costs and political pressure, the government closed the regime to new applicants in the 2024 State Budget.

Problem

The regime was aimed at people becoming Portuguese tax residents for the first time (not resident in the prior five years). It solved a classic HNW-expat problem: how to legally lower tax on foreign pensions, dividends and royalties while staying inside the EU.

After closure, the live question became transitional rights: who among those who began relocating in 2023 could still register under the old rules.

Solution

NHR offered a ten-year benefit package: a 10% rate on foreign pensions (since 2020; previously 0%), broad exemption of many categories of foreign income (dividends, interest, royalties, rents — subject to conditions), and a reduced 20% rate on Portuguese employment and self-employment income from "high value-added activities."

Transitional rules (Law 82/2023) let those who became resident by 31 December 2023 — or who held qualifying ties, such as an employment contract signed by 31 December 2023 or a rental/purchase agreement by 10 October 2023 — still register for NHR during 2024.

It was replaced by IFICI ("NHR 2.0," the Incentive for Scientific Research and Innovation): the same 20% rate on qualifying Portuguese employment income for up to 10 years, but for a narrower group — science, technology and qualified professions.

Result

A 20% flat rate on qualifying income plus broad foreign-income relief for 10 years — the regime closed to new applicants on 1 January 2024 and was replaced by IFICI.

Lessons learned

1. Tax regimes have a political shelf life: a benefit marketed as lasting "decades" can be closed in a single budget.
2. Transitional rights decide everything — a qualifying tie (contract, lease) on the right date determines access to the old rules.
3. The replacement (IFICI) is usually narrower than the original: same headline rate, smaller eligible group.

Frequently asked questions